J-curve disparity between the goods sector and the services sector: evidence from Australia/ created by Albert Wijeweera and Brian Dollery

By:

Wijeweera, Albert [author]

Contributor(s):

Dollery, Brian [author]

Material type: Text

TextSeries: Applied economics letters ; Volume 20, number 5New York: Taylor and Francis, 2013Content type:

text

Media type:

unmediated

Carrier type:

volume

ISSN:

13504851

Subject(s):

J - curve -- Bound testing approach -- Trade account -- Australia

LOC classification:

HB1.A666 APP

Online resources:

Click here to access online

Abstract: The J-curve effect phenomenon suggests that the currency devaluation would worsen the trade balance in the short run, but improve it in the long run. This article uses quarterly Australian data over the period 1988 to 2011 to examine whether J-curve effects are different between the two main components of the trade account: the goods sector and the services sector. Using the bound testing approach to cointegration and error correction modelling, we find some evidence to support the J-curve phenomenon, but the impact of real exchange rate on the trade account seems complex. While the services sector displays a J-curve effect, the goods sector response is quite the opposite: it has a positive response in the short run, but a weak negative response in the long run.

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Holdings
Item type	Current library	Call number	Vol info	Copy number	Status	Notes	Date due	Barcode
Journal Article	Main Library - Special Collections	HB1.A666 APP (Browse shelf(Opens below))	Vol. 20, no.5 (pages 452-456)	SP17976	Not for loan	For in house use only

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The J-curve effect phenomenon suggests that the currency devaluation would worsen the trade balance in the short run, but improve it in the long run. This article uses quarterly Australian data over the period 1988 to 2011 to examine whether J-curve effects are different between the two main components of the trade account: the goods sector and the services sector. Using the bound testing approach to cointegration and error correction modelling, we find some evidence to support the J-curve phenomenon, but the impact of real exchange rate on the trade account seems complex. While the services sector displays a J-curve effect, the goods sector response is quite the opposite: it has a positive response in the short run, but a weak negative response in the long run.

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